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Auto parts firms seek exports

(Shanghai Daily)
Updated: 2006-06-12 10:59

The soaring prices of raw materials and stiff competition in China's auto parts market have prompted a growing number of car components makers to export their products.

"We are looking for more overseas buyers as the rising prices of raw materials and intensified market competition squeezed our profits a lot," said Lin Xiangfei, general manager of Ju Guang Auto Parts Co Ltd, who was at the Auto Components Shanghai 2006 over the weekend at the Shanghai Automobile Exhibition Center.

Lin said a 20 to 30 percent price jump for steel and other raw materials over the past several months has added an average of 40,000 yuan (US$5,000) to the company's cost.

Last year, profit at the company, which makes radiator fan, air blower and drive wheel, sank over 30 percent. The average profit margin for Chinese auto parts producers was about 5.7 percent in 2005.

Ju Guang is not alone. Chi Bangtu, general manager of Bangzhong Auto Parts Co Ltd, said it also plans to export more products overseas as most of the carmakers prefer to purchase from their own auto parts supplier network.

Moreover, the influx of competitive foreign auto parts suppliers such as Delphi Corp and Visteon Corp with their strong financial and R&D capability have also hurt the Chinese companies.

China's auto industry has increased rapidly by an annual average of over 30 percent in recent years, which fuels the rapid development of the auto parts sector. In 2005, there were more than 5,000 domestic auto parts companies and their production scale reached 440 billion yuan. The total sales are expected to reach 800 billion yuan by 2010.

Under such fierce competition, China has formed a number of export-oriented auto parts makers, which take advantage of their cheap prices.

The total export value of auto products jumped 51 percent to US$19.7 billion last year, 43 percent of which were contributed by auto parts. The export value of auto parts hit US$42.5 billion for the first quarter of this year, up 40 percent year on year, according to China Association of Automobile Manufacturers.